Ag Barometer drifts lower

The Ag Economy Barometer drifted lower in January to a reading of 167, a decline of 7 points compared to December and equal to the index’s November reading. The Index of Current Conditions in January was essentially flat compared to a month earlier with a reading of 199 vs. 202 in December, whereas the Index of Future Expectations declined 10 points to a reading of 151. Since peaking in October, the Ag Economy Barometer has fallen 16 points or about 9 percent. The barometer’s decline over the last three months is all attributable to weaker expectations for the future as the Index of Future Expectations has fallen 35 points or about 19 percent since October. The decline in future expectations stands in contrast to the Index of Current Conditions which in January was 21 points, or about 12 percent, higher than in October. The ongoing strength in the Current Conditions Index appears to be driven by the ongoing rally in crop prices, while the deterioration in the Futures Expectations Index seems to be motivated by longer-run concerns about policies that could impact U.S. agriculture in the future. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from January 18-22, 2021.